Investors shrugged off Aliso Viejo-based QLogic Corp.’s positive outlook for the current quarter and sent shares plummeting on Friday.
The stock slumped 9% in afternoon New York trading on a recent market value of $2 billion. That’s after shares were off about 8% in afterhours trading on Thursday.
QLogic makes electronics that speed up the flow of data on storage networks used by large corporations, banks and retailers.
In a call with analysts on Thursday QLogic said it’s looking for June quarter sales of $140 million to $146 million, just short of analysts’ expectation of $147 million in sales.
The company expects profits of $31 million to $34 million, in line with analysts’ expectation of $30 million in profits.
Investors shrugged off the raised profit outlook because it wasn’t a true bottom-line boost driven by better operations or higher sales.
QLogic said the higher profits were due to a tax benefit that’s taking effect during the current quarter.
“Investors don’t care because the upward revision was due to a lower expected tax rate,” said Kaushik Roy, an analyst at Wedbush Securities LLC in San Francisco. “It has not much to do with the fundamentals of the business.”
The bearish view comes after the company reported March quarter results that beat analysts’ expectations.
QLogic reported $146 million in sales, up 12% from the same period a year earlier and beating analysts’ expected $143 million in revenues.
Excluding one-time charges for taxes, stock compensation, write-downs on assets and other costs, the company posted $32 million in profits, up 32% from the year-ago quarter and ahead of analysts’ expected $30 million in profits.
QLogic took a hefty one-time charge of $30 million that had to do with a licensing agreement with one of its subsidiaries.
